Multi-Generational Wealth Transfer: The Financial Records You Need for a Smooth Transition
Written by
Dawn Allcot
Edited by
Zuri Anderson
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
An estimated $84 trillion could change hands over the next few decades. As the baby boomer generation ages, they will pass savings and assets on to their children, grandchildren and charitable organizations.
If you’ve reached retirement age, you should also have started estate planning. But you don’t have to wait that long.
“Parents should begin preparing for a future wealth transfer as soon as possible,” said Family Office Resource Group founder Brian Weiner.
Kevin Reed, chief revenue officer at Aquilance, agreed.
“It’s never too early to start thinking about wealth transfer,” Reed said. “The teenage years are a great time to begin laying the groundwork, especially in terms of education and communication.”
Conversations should center on financial responsibility, family values, and the child’s goals and dreams, he added.
Beyond that, you’ll want to ensure you have all the appropriate financial records and access to data necessary for a smooth wealth transfer.
“A sudden, overwhelming information dump later in life is rarely the best approach,” Reed said.
He recommended using software such as leafplanner, which uses a guided approach to help families identify blind spots and risks and to organize and share information through a central, secure platform.
As you embark on the planning stages for wealth transfer, let’s explore the documents you need and the professionals who can help.
Last Will and Testament
When people think about estate planning, they usually know they need a last will and testament.
“A will is a legal document that outlines how your probate assets will be distributed after your death,” Reed said.
Before creating that will, however, you’ll need to take inventory of your assets and get a clear picture of your finances.
Trust Documents
A will is merely a set of instructions and can be subject to probate, which can delay the inheritance being passed on.
“A revocable trust can avoid probate, offering privacy and provide the administration of the underlying assets in the event of incapacity during your life,” Reed said.
Think of a trust as a way to manage assets according to your wishes — both now and after your death.
Healthcare Directives and Power-of-Attorney
A smooth transition doesn’t just relate to financial matters.
“Your trust documents, and specifically your healthcare directives and power of attorney, are… important,” Weiner said. “If you get into an accident, for example, you will need the healthcare directives to guide how care is administered. You need a power-of-attorney who is empowered to make decisions on your behalf, if needed.”
Account Statements
Gathering recent account statements for checking, savings and investments provides a clear financial picture of day-to-day activities and liquid assets.
“Statements also provide information on sources of income and can help identify assets not previously accounted for,” Reed said.
Life Insurance Policies
“Life insurance is often a significant asset for many families,” Reed said. You’ll want to gather these documents and verify the coverage, beneficiaries and terms.
Retirement Account Statements
“These accounts have specific tax implications for beneficiaries,” Reed said. You’ll want to account for these account balances in your financial planning.
Tax Returns
Exploring the past few years of tax returns can help your loved ones understand the tax implications of their inheritance.
“Reviewing these documents provides a history of income, deductions and potential tax liabilities,” Reed said.
Real Estate Deeds and Car Titles
You’ll need these to transfer ownership. Also, gather information regarding loans and mortgages.
List of Passwords and PINs
Sharing a list of passwords and PINs can make things easier for your loved ones during the stressful days afer your death.
“I always encourage families to write down their passwords in a central place — this should be both physical and digital,” Weiner said.
Also, make sure to account for digital assets stored in online accounts or crypto wallets.
“These can have significant value,” Reed said.
Final Take To GO
Reed and Weiner both recommended seeking guidance from CPAs, attorneys and financial advisors.
“These are the ones who have a complete view of your financials,” Weiner said.
Also, be prepared to review and revise these documents as your life circumstances change.
“Creating an estate plan is not a one-and-done event,” Reed concluded.
More From GOBankingRates
